STEEPLE analysis of a given organization

Figure 1. STEEPLE analysis.

STEEPLE is a framework that is useful in examining a firm’s external

environment. Building on SWOT analysis studied in the previous section,

STEEPLE is used to better recognise and understand the opportunities and

threats facing a business. STEEPLE is an acronym designed to prevent

analysts from leaving out important factors when evaluating the external

environment. The letters stand for the following:

● Sociocultural
● Technological
● Economic
● Environmental
● Political
● Legal
● Ethical

Note that earlier versions of the tool were called PEST and PESTLE.

PESTLE does not include ethics, and PEST excludes legal and environmental

factors as well. In all of the models, the classification of factors in a specific

category is not as important as remembering to include them somewhere. For

example, the growth of social media could be considered a sociocultural

factor as well as a technological one. Where it is placed is not as important as

making sure it is included.

STEEPLE is particularly useful in evaluating new market strategies

(remember the Ansoff matrix) because it highlights factors that may differ
from where the firm is already operating. STEEPLE can be applied to an

entire country, or it can be used to look at a smaller geographic area. A

STEEPLE analysis is usually only meaningful when it focuses on a particular

line of business. So, for example, to return to our example of the Disney

Company, it would be difficult to apply STEEPLE to the company’s movie,

theme park and television activities worldwide. Instead, STEEPLE would be

used for one of those businesses in one of its markets, e.g. STEEPLE analysis

of Disneyland Paris.

When using STEEPLE, the focus should be on those factors that are relevant

for the particular business decision at hand. The tool can be used to determine

whether or not to enter a new market, as well as determining whether a firm’s

offerings should be modified, either when entering a new market or due to

changes in the environment.

Important
STEEPLE is used to evaluate the firm’s external environment – opportunities and
threats.

Be aware

STEEPLE is not used to consider the firm’s own internal strengths and
weaknesses.

Exam tip

When asked to complete a SWOT analysis evaluating only external opportunities

and threats, it may be effective to organise your response using a STEEPLE
analysis.

Sociocultural factors
Sociocultural factors relate to the way people live and what they believe and

value. This factor therefore includes a wide variety of considerations.

● Religion includes consideration of both the dominant and minority

religions of the population, as well as the importance and influence of
religion in daily life.
● Cuisine is also included in sociocultural factors: what do people eat, at
what time, and with whom? In the case of Disney, the company failed
to foresee the importance of the midday meal in France, where people
often enjoy wine at lunch. The company initially did not sell alcohol at
the park, but this was soon changed.
● Family life: Are families large or small? Is the nuclear family the
essential family unit, or do extended families including several
generations live together under one roof?
● Demographics is included with sociocultural factors. What are the
statistics in terms of fertility and life expectancy? What does the
pyramid of age look like? Figure 3 and Figure 4 below represent the
average age of the populations in Japan and Uganda respectively. What
goods and services might be demanded by an aging population in Japan
that would not find a significant number of buyers in Uganda?
● Health and types of diseases can also be included in this category. What
diseases are most prevalent in the country and do all citizens have
access to health care? Figure 2 shows a map of geographic zones
impacted by malaria.

Figure 2. Geographic zones impacted by malaria.

Education is another element included in sociocultural factors. How long is

the formal education system in the country? What percentage of individuals

complete a basic education, secondary school, and university? Is there a

difference in the way boys and girls are educated?

● Leisure activities: What do people do in their spare time?

Figure 3. Japan has an ageing population. The median age is 46.1.

Source: Indexmundi
 Figure 4. Uganda has a young population; the average age is 15.5 years old.

Source: Indexmundi

Technological factors
It would be impossible to list all of the technological factors that might be a

part of a company’s competitive environment. The following list provides an

idea of the range of advances that can be included in this category.

● Some of the biggest technological changes over the last few decades
are related to the explosion of innovations in information technology.
The commercialisation of affordable personal computers (1980s) was
followed by the emergence of the internet and mobile phones (1990s)
and later tablets and smartphones. These tools have revolutionised the
way work gets done, as well as how consumers spend their leisure time.
Indeed, IT technology has caused a blurring of the boundaries between
work and leisure. The development of these devices has been
accompanied by new software and applications that can reduce costs
and open new markets for businesses.
● Closely linked to the growth of information technology is the
increasing availability of big data that can be exploited by companies
to understand and meet the needs of their clients.
● Other key technologies include nanotechnology, with applications in
fields as varied as textiles and electronics, and genetic engineering,
which is leading to advances in medical and agricultural science.
Technologies like 3D printing, artificial intelligence and robotics are
just beginning to change the way we live and work.
● In addition to these technologies that are driving change worldwide, a
more traditional factor to take into consideration is the availability of
infrastructure, particularly in developing countries. Infrastructure
includes things like ports and road and rail networks, drinking water
and sanitation facilities, and communication networks and reliable
electricity, all of which are necessary to doing business. An interesting
trend in this regard is 'leapfrogging', whereby mobile phone and
renewable energy technologies have allowed developing countries to
progress without passing through the stage where basic infrastructure
like telephone and electricity lines have to be set up. Click here to learn
how the Indian company SMS GupShup is setting up social networks
accessible with simple phones that allow texting but not internet
connection.
 Figure 5. The impact of 3D printing on business is just beginning.
Credit: prescott09 iStock

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Case study

Leapfrogging conventional infrastructure: the example of droneports

Just as mobile phones allowed the population of developing countries to benefit

from phone services without traditional phone lines, droneports may allow them
to benefit from delivery services without roads. According to Foster and Partners
(link below), only one third of Africans live within two kilometres of a road that is
useable year-round. This prevents them from receiving medical supplies, as well
as less urgent goods that have the potential to improve their lives.

The high cost of building roads has inspired the development community to think
of alternatives. One such possibility is the construction of droneports that would
facilitate the delivery of needed supplies by drone, as well as serving as
community hubs in remote villages. A pilot project involving construction of a
droneport from locally sourced building materials was to begin in Rwanda in
2016.

1. Explain how the construction of droneports might impact businesses

hoping to sell to remote locations in Africa.

It can increase their ability to reach more customers with fewer costs, as they do
not have to build premises near remote locations which would also impact their
ability to import products easily with low cost, the drones can also have screens
attached to them which can be used for marketing purposes to reach further
audiences/collaborate with brands in the same or different markets. It can also
decrease their shipping/delivery costs, as they do not need to hire humans to
deliver their products, which puts more emphasis on the Operations area of the
business rather than the Human Resources area. However, it is also risky as
people living in remote areas may not have access to electronics and they may
be skeptical of the new technology and unable to pay using more modern
methods because they may not have internet or credit cards. Remote villages
may have more of a closed and conservative community which may not be open
to technological advances, so the tactic would be risky.
Describe a potential disadvantage of drone delivery to businesses already
located in Africa.

Businesses already located in Africa would suffer as their products would not be
as accessible to the customers if they do not use drones to transport their items,
decreasing their sales and their ability to reach their target audience. However, if
the products being sold by the existing business is larger in size/weight than the
drone’s capacity to carry, it may be unaffected by the new businesses. Also, if the
remote area has rough ground that would make it difficult to deliver products by
car, delivering it through the air may result in less damaged/quicker deliveries,
which would make customers favor the business using drones rather than the
traditional business, and marketing products would also be easier as video
commercials could be shown, which would be more effective at marketing and
promoting the company’s products.